“On the co-ordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public work contracts.”

The recital sets the background:

“Whereas [certain directives relating to the co-ordination of procedures for the award of public supply contracts] … do not contain any specific provisions ensuring their effective application…

Whereas the opening up of public procurement to Community competition necessitates a substantial increase in the guarantees of transparency and non-discrimination; whereas, for it to have tangible effects, effective and rapid remedies must be available in the case of infringements of Community Law in the field of public procurement or national rules implementing that law…

Whereas, since procedures for the award of public contracts are of such short duration, competent review bodies must, among other things, be authorised to take interim measures aimed at suspending such a procedure or the implementation of any decisions which may be taken by the contracting authorities; whereas the short duration of the procedures means that the aforementioned infringements need to be dealt with urgently;

Whereas it is necessary to ensure that adequate procedures exist in all the Member States to permit the setting aside of decisions taken unlawfully and compensation of persons harmed by an infringement…

Article 1:

(1) The Member States shall take the measures necessary to ensure that, as regards contract award procedures falling with the scope of [certain directives] decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with conditions set out in the following Articles…

….

(3) The Member States shall ensure that the review procedures are available, under detailed rules which the Member States may establish, at least to any person having or having had an interest in obtaining a particular supply or public works contract and who has been or risks being harmed by an alleged infringement. In particular, the Member States may require that the person seeking the review must have previously notified the contracting authority of the alleged infringement and of his intention to seek review.”

“(1) Subject to paragraphs (5), (6) and (7) below, a contracting authority shall award a public services contract on the basis of the offer which –

(a) is the most economically advantageous to the contracting authority, or

(b) offers the lowest price.

(2) The criteria which a contracting authority may use to determine that an offer is the most economically advantageous include period for completion or delivery, quality, aesthetic and functional characteristics, technical merit, after-sales service, technical assistance and price.

(3) When a contracting authority intends to award a public services contract on the basis of the offer which is the most economically advantageous it shall state the criteria on which it intends to base its decision, where possible in descending order of importance, in the contract notice or in the contract documents.”

The procedure adopted by GMWDA in this case was intended to proceed on the first of the two bases set out in Regulation 21(1), viz, to identify the most economically advantageous tender. Sita says that, in the events which happened, GMWDA failed to identify the tender which was most economically advantageous. While it purported to do so at the first stage, at which VL was identified as the preferred bidder, thereafter VL’s bid changed to such an extent that, in the absence of an opportunity for Sita to re-tender (which was not offered to it) it could not be said that VL’s offering was the most economically advantageous.

“23(2) Subject to paragraph (3) below, a contracting authority shall, within 15 days of the date on which it receives a request in writing from any service provider who was unsuccessful … inform that service provider of the reasons why he was unsuccessful and, if the service provider submitted an admissible tender, the contracting authority shall inform him of the characteristics and relative advantages of the successful tender as well as the name of the person awarded the contract.

(3) A contracting authority may withhold any information to be provided in accordance with paragraph (2) above where the disclosure of such information would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of any person or might prejudice fair competition between service providers.”

(1) The obligation of a contracting authority to comply with the provisions of these regulations…and with any enforceable Community Obligation in respect of a public services contract…is a duty owed to services providers.

(2) A breach of the duty owed pursuant to paragraph (1)…above shall not be a criminal offence but any breach of the duties shall be actionable by any services provider who, in consequence suffers, or risks suffering, loss or damage.”

(a) The services provider bringing the proceedings has informed the contracting authority of the breach or apprehended breach of the duty owed to him pursuant to paragraph (1)…by the contracting authority and of his intention to bring proceedings under this regulation in respect of it; and

(b) they are brought promptly and in any event within three months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought.”

Thus a form of “letter before action” is required before any proceedings can be brought, and there is an ostensibly very short window within which the proceedings can be brought.

“25. By its first question, the national court asks, in essence, whether Article 1 of Directive 89/665 requires that the period for bringing proceedings seeking to have an infringement of the public procurement rules established or to obtain damages for the infringement of those rules starts to run from the date of the infringement of those rules or from the date on which the claimant knew, or ought to have known, of that infringement.”

Paragraph 26 observes that the Directive leaves it for each Member State to establish time limits for bringing a review and in paragraph 27 sets certain limits on that:

“27. The detailed procedural rules governing the remedies intended to protect rights conferred by Community law on candidates and tenderers harmed by decisions of contracting authorities must not compromise the effectiveness of [the Directive]…

It is for that reason appropriate to determine whether, in the light of the purpose of [the Directive], national legislation such as that at issue in the main proceedings does not adversely affect rights conferred on individuals by Community law.”

The English provisions under consideration in that case were the equivalent of regulation 32(4).

“29. In that regard, it should be recalled that Article 1(1) of [the Directive] requires Member States to guarantee that unlawful decisions of contracting authorities can be subjected to effective review which is as swift as possible…”

Thus the Court acknowledges the need for speed. It becomes apparent later on in the judgment that the speed which the court has in mind relates to, or at least includes, the speed with which proceedings must be commenced, if they are to be commenced.

“30. However, the fact that a candidate or tenderer learns that its application or tender has been rejected does not place it in a position effectively to bring proceedings. Such information is insufficient to enable the candidate or tenderer to establish whether there has been any illegality which might form the subject matter of the proceedings.

31. It is only once a concerned candidate or tenderer has been informed of the reasons for its elimination from the public procurement procedure that it may come to an informed view as to whether there has been an infringement of the applicable provisions and as to the appropriateness of bringing proceedings.

32. It follows that the objective laid down in Article 1(1) of [the Directive] of guaranteeing effective procedures for review of infringements of the provisions applicable in the field of public procurement can be realised only if the period laid down for bringing such proceedings start to run only from the date on which the claimant knew, or ought to have known, of the alleged infringement of those provisions…

33. This conclusion is supported by the fact that [two other provisions of another directive] which was in force at the time of the facts in the main proceedings, requires contracting authorities to notify unsuccessful candidates and tenderers of the reason for the decision concerning them. Such provisions are consistent with a system of limitation periods under which those periods start to run from the date on which the claimant knew, or ought to have known, of the alleged infringement of the provisions applicable in the field of public procurement.

….

34. The answer to the first question accordingly is that Article (1) of [the Directive] requires that the period for bringing proceedings seeking to have an infringement of the public procurement rules or to obtain damages for the infringement of those rules should start to run from the date on which the claimant knew, or ought to have known, of the infringement.”

“45. Merely for the sake of completeness, it may be mentioned that the time when the period starts running for bringing a claim for compensation must not be made to depend on the fact that the applicant knew or ought to have known of the damage incurred by him. The damage that follows from a breach of duty sometimes comes to light only after some delay. Waiting for knowledge of the damage would thus run counter to the principle of review ‘as rapidly as possible’ within the meaning of Article 1(1) of [the Directive]. In return, however, it must be made possible for the tenderer or candidate concerned if necessary, first to make an application for a declaration of a breach of procurement law and then to quantify the damage and claim compensation in subsequent proceedings.”

The Court does not explicitly approve that paragraph or the substance of its contents, but the whole tenor of the judgment is such that I find that the Court meant what it said and that its absence of any reference to damage was because it considered it to be irrelevant. It has to be acknowledged that the question that was addressed to the Court by the English court did not raise the distinction at all. It asked in terms whether time should start running:

“from the date when the tenderer knew or ought to have known that the procurement procedure and award infringed EC public procurement law or as from the date of breach of the applicable public procurement provisions”.

That doubtless moulded the decision. Nevertheless, its terms are clear, and the absence of any reference to knowing about damage, in the light of the express reference to the point in the Advocate General’s Opinion, indicates strongly that the Court did not think that the Directive required that there be knowledge of the damage too.

“37…whether [the Directive] is to be interpreted as precluding a provision…which requires that proceedings be brought promptly.

38…Articles 1(1) of [the Directive] requires Member States to guarantee that decisions of contracting authorities can be subjected to effective review which is as swift as possible. In order to attain the objective of rapidity pursued by that Directive, Member States may impose limitation periods for actions in order to require traders to challenge promptly preliminary measures or interim decisions taken in public procurement procedures…

39…The objective of rapidity pursued by [the Directive] must be achieved in national law in compliance with the requirements of legal certainty…

…43. It follows that the answer to the first part of the second question is that Article 1(1) of [the Directive] precludes a national provision, such as that at issue in the main proceedings, which allows a national court to dismiss, as being out of time, proceedings…on the basis of the criterion, appraised in a discretionary manner, that such proceedings must be brought promptly.”

“44. By the second part of the second question, the national court asks, in essence, which effects follow from [the Directive] in respect of the discretion conferred on the national courts to extend periods within which proceedings must be brought.

45. In the case of national provisions transposing a directive, national courts are bound to interpret national law, so far as possible, in the light of the wording and purpose of the directive concerned in order to achieve the results sought by that directive…

…..

46. In the present case, it is for the national court, as far as is at all possible, to interpret the domestic provisions establishing the limitation period in a manner which accords with the objective of [the Directive]…

47. In order to satisfy the requirements of the answer given to the first question, the national court dealing with the case must, as far as is at all possible, interpret the national provisions governing the limitation period in such a way as to ensure that that period begins to run only from the date on which the claimant knew, or ought to have known, of the infringement of the rules applicable to the public procurement procedure in question.

48. If the national provisions at issue do not lend themselves to such an interpretation, that court is bound, in exercise of the discretion conferred on it, to extend the period for bringing proceedings in such a manner as to ensure that the claimant has a period equivalent to that which it would have had if the period provided for by the applicable national legislation had run from the date on which the claimant knew, or ought to have known, of the infringement of the public procurement rule.

49. In any event, if the national provisions do not lend themselves to an interpretation which accords with [the Directive] the national court must refrain from applying those provisions, in order to apply Community law fully and to protect the rights conferred thereby on individuals.”

Thus the proper approach involves the following steps: i) It is for this court to interpret the English legislation, but it should do so in the light of the wording and purpose of the Directive.ii) The interpretation should, if possible, ensure that the limitation period runs from the date of knowledge or constructive knowledge (which is the term I will use to describe the “ought to have known” elements).

iii) If that is possible, then the national provision is compliant and can be given effect to.

iv) If such an interpretation is not possible, then any discretion available must be exercised so as to allow a limitation period equivalent to that provided by the legislation but starting from the date of knowledge or constructive knowledge.

v) If neither of those steps is possible, the actual national provision cannot be brought into line with the Directive and it must be disregarded.

I shall therefore in due course apply that approach to Regulation 32(4).

“149 Before March 2007 [which is when the contract was finally entered into] the respondents had not sustained the damage which is the basis of their claim for damages. It may be that they could earlier have made an application for interim relief but that did not start time running on the claim actually made. There is no dispute that a declaration should be made, if one is required, and the proceedings claiming damages, the relevant proceedings, are conceptually different from proceedings for quia timet relief which the regulation permits and regulates.”

I do not think that Pill LJ was necessarily addressing the point raised by Mr Bowsher in these proceedings. He was dealing with two different sorts of claims – a claim in anticipation of a breach, and a claim once the breach had occurred. The latter was held to be a different claim, and so time had not started running on that claim by virtue of the fact that there had been a previous right to sue on the anticipatory claim.

“250 …The contrast with a claim under the Regulations is clear: the latter is an action to vindicate private rights in the context of a procedure that in many cases will still be progress. Moreover, as I have already observed, a failure to comply with the procedure at any stage inevitably undermines the integrity of all that follows. Accordingly, the right of action is complete immediately and cannot be improved by allowing the procedure to continue to a conclusion. Where there has been a failure to comply with the proper procedure the later award of the contract does not constitute a separate breach of duty; it is merely the final step in what has already become a flawed process. For these reasons I do not think that the approach adopted in Burkett can simply be transposed to a claim under the Regulations.

251. Nonetheless, I am not persuaded that in a case such as the present grounds for the proceedings first arise as soon as a breach of the prescribed procedure can be apprehended. The proposition that time for bringing proceedings in respect of a breach of the Regulations runs from the date when a breach can be apprehended strikes me as rather bizarre and is in my view the result of a failure to recognise the difference between proceedings based on an apprehended breach and proceedings based on a breach that has been committed.

252 It is clear from regulation 47(7) and (8) that the court not only has an express power to intervene in the procurement procedure before it has reached a conclusion, but that, subject to paragraph (9), it retains its ordinary powers of granting relief, including relief in the form of a quia timet injunction. There is a fundamental distinction between what might be called ‘anticipatory’ proceedings based on an apprehended breach of duty and proceedings based on a breach already committed and the grounds on which they may be brought are conceptually different. Grounds for bringing anticipatory proceedings arise when there is sufficient evidence of an intention on the part of the contracting authority not to comply with the prescribed procedure. In all other cases grounds for bringing proceedings arise only when the contracting authority fails to comply with that procedure. This distinction is important, because regulation 47(7)(b) speaks of grounds for the bringing of the proceedings and thereby directs attention to the particular proceedings before the court. For these reasons I do not think that the mere existence of grounds that will support anticipatory proceedings is sufficient to start time running against a claimant who seeks relief in respect of an accrued breach of duty. It follows that in my view grounds for bringing the proceedings did not arise before 7th March 2007 and the claim was brought in time.”

“(x) time did not run against RMP in respect of its claim founded on actual breach (as distinct from any earlier claim which there might have been for quia timet relief in respect of an apprehended breach) until the first actual breach which in this case was March 2007; note however that any failure by a contacting authority to comply with any step in the required procedure involves an actual breach and it is accordingly not open to a putative claimant to await until the last in a series of actual breaches and to contend that time runs only from then”.

Thus there was not a series of causes of action, in respect of a series of breaches. There were, she said, potentially two – one for apprehended breach (one which has not yet occurred), and one for a breach once it had occurred, which thereafter flawed the rest of the process. This analysis was said to be inconsistent with the requirement that damages be an ingredient of the cause of action, and part of “grounds”.

“27. It must be recalled at the outset that, in accordance with settled case law, the statement of the reasons on which a decision adversely affecting a person is based must allow the Community Court to exercise its power of review as to its legality and must provide the person concerned with the information necessary to enable him to decide whether or not the decision is well founded …

…..

42. It is undeniable that this last provision requires every contracting authority to give a tenderer the true reasons for the rejection of its bid. Moreover, the reasons given must reflect the actual conduct of the evaluation procedure. In that connection it must be recalled that the reasons given for a decision which has adverse effect must be logically compatible with the decision as adopted …

43. A statement of reasons which does not identify the true basis upon which a decision rejecting a bid has been taken and does not reflect faithfully the manner in which the rejected a bid has been evaluated is not transparent and does not fulfil the obligation to state reasons in Article 100(2) of the Financial Regulation.”

“149. If such a defect [in the provision of information] is established, the Court will then examine whether, but for that defect, the procedure could have had a different outcome. From that point of view, such a defect can constitute an infringement of the equality of opportunity of tenderers only insofar as the explanations provided by the applicant demonstrate, in a plausible and sufficiently detailed manner, that the procedure could have had a different outcome as far as it was concerned.”

Mr Bowsher submitted that I could not take that approach. He said it amounted to legislation and relied on Fleming v HMRC[2008] 1 WLR 195. In that case the House of Lords declined (in effect) to provide some transitional provisions to cover a gap that seemed to exist in legislation. Their Lordships declined to do so, on the footing (amongst other things) that it would have been legislating. Mr Bowsher said that the above approach amounted to the same thing, and I should not do it, with the result that the Regulation did not apply at all and the only period was the 6 year period applicable to breach of statutory duty under the Limitation Act 1980. I reject that submission. The House of Lords was dealing with a very different piece of legislation, with no prospect of any gap being bridged by judicial discretion. As Lord Hope of Craighead said (at paragraph 10):

“The issue is not one of statutory interpretation, for which the court must accept responsibility. There is a gap in the legislation which is unfilled.”

That does not describe the situation in the case before me. There is a statutory provision which needs to be interpreted and implemented in line with European jurisprudence. The provision is not somehow void – the CJEU suggested no such thing. It is a provision which as a matter of language and procedure can be applied in accordance with what the CJEU have said. In doing that I am not legislating; I am applying the provision in the light of binding pronouncements of a higher court.

The Greater Manchester Waste Disposal Authority … today confirmed its intention to supply Solid Recovered Fuel to a Combined Heat and Power facility as part of its future municipal waste solution for 1.4 million tonnes of municipal waste that is created in the conurbation each year.

The Authority announced that it had agreed a proposal that this supply should be by rail transport to a facility that is planned at the Ineos Chlor Petro-Chemical plant in Runcorn. …

A £320 million investment in new infrastructure is planned and the Authority and Viridor/Laing (the preferred bidder for the contract) are partway through local consultations on new facilities.

Annually 600,000 tonnes of material that cannot be recycled will be taken to 5 new Mechanical & Biological Treatment/Anaerobic Digestion plants located in Salford, North & South Manchester, Oldham and Stockport. These plants will create around 275,000 tonnes of a stabilised fuel produced to a high specification. This fuel will be transported by rail to a new power generation facility that will supply both steam and electricity for use at the Ineos Chlor site and as a replacement for imported fossil fuel. “

From this material Sita would have understood that the project had materially changed its shape, but would not have known the financial consequences of that.

The relevant parts are said to be as follows: i) Paragraph 1.1 says: “This report reviews the financial and commercial scores attributable to VL, at the present time, to assist the Authority in its assessment of whether a full re-evaluation of VL’sPreferred Bidder status is required, with Sita being invited to resubmit its proposals, or whether there is sufficient evidence to warrant continuing negotiations with VL as Preferred Bidder.”ii) The Introduction observes that Sita’s model remains as submitted and unadjusted so it did not reflect changes arising from indexation on capital or operating costs since the time of its submission. Mr Bowsher accepted that that probably operated in favour of Sita in any comparison.

iii) The conclusion of the report on financial and commercial scoring was that, comparing the original Sita bid with the current VL bid, the former attracted three more points. However, the Sita bid had, of course, not been updated and was no longer truly equivalent, as the report from time to time observed. It said that the combined total technical, financial and legal scores for each bidder’s MSB1 solution would have been very similar based on the current financial score and technical and legal scores from June 2007.

iv) A section headed “Cost Changes since November 2007″ showed significant increases in costs, in particular in relation to capital expenditure. Mr Bowsher points out that this information was not communicated to Sita at this time, or at any time until well after the contract with VL was concluded (i.e. in November 2009).

iii) A statement at paragraph 7.1.8 that the December 2007 EY review showed the points scoring of Sita (based on its original bid) and VL to similar levels. On that basis VL remained the preferred bidder and officers had determined that it was appropriate to continue to negotiate with VL towards “a financial close”.

iv) Some finalised financial models were still awaited. “Once we have those and subject to [certain comments], we will have certainty of VL’s commercial position. Only at that point will the Authority be able to form a final view that the VL bid remains the Most Economically Advantageous Tender.”

v) Question marks about MEAT are reflected in paragraph 7.4. It observes that Preferred Bidder status was awarded in January 2007, and there had been an unexpectedly long negotiating procedure.

“7.4.1 …However, with that has come a considerable increase in cost of some one-third at nominal value. Much of this has been triggered by external events to our contract far more related to world economies than to our specific relationship with our Preferred Bidder, but beyond that we have found during the last nine months or so particularly, that VL and Ineos Chlor, its project-on-project RDF service provider, are very risk averse and that has conditioned their behaviour.

7.4.2.1 The significance of the increase in cost identified in 7.4.1 must be recognised. In particular, it must cause the Authority to consider whether that increased cost casts doubt upon the VL bid still being the “Most Economically Advantageous Tender” and, therefore, the status of VL as Preferred Bidder.”

Mr Bowsher put specific emphasis on paragraph 7.4.2.

vi) The conclusion was that no more could be squeezed out of the deal, all aspirations could be delivered upon, it was a good financial arrangement for the Authority and that the officers involved, mindful of their statutory responsibilities, supported and endorsed the recommendations made in section 2.

“The recent press announcement has prompted me again to revisit how we, the Sita Consortium, could assist you in your high profile and prestigious Project, and, bearing in mind our continuing interest as Reserve Bidder, I wish to put forward an excellent opportunity for both the Council and the Greater Manchester taxpayer.”

The letter went on to offer to submit a further financial offer based on “today’s Project, including its revised scope of Works and Services”.

[GMWDA] has now completed its evaluation of all the tenders received for this Project and, on behalf of GMWDA, I am therefore required by the Public Contracts Regulations 2006 (the “Regulations”) formally to inform you, again, that on this occasion your tender has not been successful.

As indicated in the notice published by the [OJEU]…the award criteria for this Project was the most economically advantageous tender evaluated against those criteria sent out with the Invitation to Tender.

Your overall score in relation to your response to the IsBafo was 63, whereas the successful tenderer’s overall score was 70. The name of the successful tenderer is Viridor Laing (Greater Manchester) Limited.

It is GMWDA’s intention, subject to confirmation of private finance initiative credits from DEFRA, to enter into the PFI Contract and related documentation on or after ten calendar days from the date of this letter (the “standstill period”) to Viridor Laing (Greater Manchester) Limited.

You may request additional debrief information to be made available to you within ten calendar days from the day after the date of this letter, provided that such request is received by GMWDA no later than two working days after the date of this letter.

Should your request be made after this date, additional debrief information will still be available to you within 15 days of receipt a [sic] written request.”

“…pursuant to Regulation 32 of the Public Contracts Regulations, please take this letter as a formal notice from Sita requesting the reasons why Sita’s bid (together with its consortium members) was unsuccessful. In your response please include the characteristics and relative advantages of Viridor Laing (Greater Manchester) Limited’s successful tender as it now stands. Please let us have your written response setting out these reasons, following which Sita would like to discuss this information at a meeting with GMWDA within the time limit set out in regulation 32(5).

Without limiting the foregoing, any information disclosed pursuant to this request should include the following:

(1) The Project’s original evaluation criteria…

(2) Sita’s evaluation score at appointment of Preferred Bidder against the Evaluation Criteria;

(3) The score obtained by the Viridor Laing consortium at appointment of Preferred Bidder against the Evaluation Criteria;

(5) Confirmation that the Evaluation Criteria was applied without amendment in relation to the decision to award the contract to Viridor Laing (Greater Manchester) Limited compared to that which was applied at appointment of Preferred Bidder;

(6) All changes (if any) including any changes in weighting or required as a result of changing any scope of Works or Services to the Evaluation Criteria which were applied in relation to the decision to award….

(7) An explanation of each change made to the Project documentation and associated agreements since appointment of Preferred Bidder which has, or can reasonably be expected to have, led to any change in the:

(i) value of prices bid, capex, financing costs or otherwise;

(ii) the allocation of risk between the parties;

(iii) risk profile of the Project generally.

…..

(8) An explanation of any changes to the technical solution….including (without limitation) a detailed explanation of the financial impact of such change on the Project….

Please also treat the above requests as requests for information under the Freedom of Information Act 2000 (FoIA) and the Environmental Information Regulations 2004 (EIR).”

In the penultimate paragraph the letter asked for a copy of the contract to be entered into with VL. The letter ended by reserving the right to challenge the award.

“Without prejudice to that limitation, and in order to comply with the Authority’s duties under the Alcatel principles, we respond to the requests you have enumerated in your letter to a greater extent than your entitlement, but not to the full extent of your request, which seeks more information than the 2006 Regulations and Alcatel principles would require.

(1) The Evaluation Criteria for the project were provided to you as part of the Invitation to Tender. These criteria were applied by the Authority in respect of the valuation of all tenders received in response to the ITT and in respect of the Best and Final Offers submitted by Sita and Viridor Laing (Greater Manchester) Limited.

(2) We enclose a further copy of the Authority’s letter of 26th January 2007 and a note of the de-brief meeting which was held on 30th January 2007 following the selection of Viridor Laing (Greater Manchester) Limited as Preferred Bidder. These give full details of the scores achieved by the Sita consortium and Viridor Laing (Greater Manchester) Limited in respect of the various standard and varied bids submitted. We also attach a schedule showing a breakdown of such scores, which was given to you at the debrief meeting. We note that it is common ground that the Preferred Bidder approach was to be and was, in fact, adopted.

You are not legally entitled to any further information. What is provided now is without prejudice to that position. Both Viridor Laing (Greater Manchester) Limited and the Sita consortium submitted in their BaFOs alternative facilities as back-up for the EfW element of the Project. Viridor Laing (Greater Manchester) Limited offered a combined Heat and Power facility located at the Ineos Chlor Site as Runcorn. At the request of the Authority, Viridor Laing (Greater Manchester) Limited were invited to develop the solution further in the course of the negotiations following their appointment as Preferred Bidder. To satisfy itself that Viridor Laing (Greater Manchester) Limited should remain the Preferred Bidder based on the Runcorn Facility being the EfW facility for the Project, the Authority re-evaluated the Viridor Laing (Greater Manchester) Limited bid once the solution had been developed. The same Evaluation Criteria, weightings and methodology were applied as had been applied at ITT and BaFO. On the basis of this, the Preferred Bidder decision was not undermined. On the basis of this evaluation, the Authority resolved at its meeting on 29th June 2007 to proceed with the Runcorn facility as its EfW facility.

(3) See response to (2) above.

(4) The decision to appoint Viridor Laing (Greater Manchester) Limited as Preferred Bidder was made by the Authority on 26th January 2007 based upon the evaluation of the Best and Final Offers. Viridor Laing (Greater Manchester) Limited were then invited to negotiate with the Authority towards a financial close of the Project as anticipated under the competitive negotiated procedure. The details of these negotiations are confidential. However, as noted in paragraph (2) above, the Authority did re-assess the Viridor Laing (Greater Manchester) Limited score on the basis of the Runcorn Facility.

(5) See response to (1) above.

(6) See responses to (1) and (4) above.

(7) The Authority is unable to provide you with the information requested, as to do so would be likely to prejudice the legitimate commercial interests of Viridor Laing (Greater Manchester) Limited and/or otherwise prejudice fair competition between economic operators in the waste market…. Nevertheless the Authority is committed to openness and transparency and, again without prejudice, to the limits of its [duties], it proposes to publish on the Authority’s website the Project Agreement [i.e. the contract] once it has been executed, with appropriate redactions. It is our view that such publication will provide you with at least as much as, if not more then, the information to which you are entitled in law.

“The majority of the funding for the Greater Manchester world class waste solution has already been secured through strong collaborative activity, during these recent challenging economic conditions. This includes a capital contribution of £70m from the Authority in respect of additions that have been made to the works originally procured. The balance is subject to the credit committee approvals by the commercial banks.”

Miss Rose said that that demonstrated that important additions at extra capital cost had been made. That was also relevant to the transfer risk, which in turn impacted on the viability of the project. It is said that all that would have been obvious to, and known to, Sita.

“Greater Manchester Waste Disposal Authority (GMWDA) today announced that it has signed a 25 year Private Finance Initiative waste and recycling contract with Viridor Laing (Greater Manchester) Limited. Today’s detail will trigger a £640m construction programme, creating a network of state-of-the-art recycling facilities over the next five years. During this period, it is estimated that at least 5,000 much needed jobs in the building trade and the wider economy will be added to the 620 jobs at GMWDA based in Bolton, which are secured and upskilled to “green collar” jobs by the contract. Viridor Laing (Greater Manchester) Limited are planning to increase the permanent workforce by another 116 staff once the facilities are up and running. This contract is worth £3.8 bn to Viridor Laing (Greater Manchester) Limited and will increase costs (at today’s prices) to Greater Manchester householders by £1 per week. However, this compares favourably with the cost of a “do nothing build nothing” option which would cost an extra £2 a week, mostly in landfill tax and penalties.”

“In my last letter to you I referred back to an earlier letter of mine dated 9th May 2008 addressed to Paul Gavin. In that letter I gave an indication that the Authority would be publishing the Project Agreement on its website with appropriate redactions, once that agreement had been executed.

I want to give you the reassurance that the Authority will be fulfilling that promise and aims to place the project agreement, appropriately redacted, on its website in the very near future. As soon as I have a specific date for such publication, I will let you know.”

“I note from announcements and press reports that the signed PFI contracts estimated costs to Greater Manchester’s residents will amount to circa £3.8bn over the PFI contract’s term involving £640m of capital works and employing 736 people. I need not remind you that, in comparison, Sita Consortium’s BaFo bid had an overall value of circa £3.3bn, Works of £413m and employed 651 people. Bearing in mind:

Contract signature was ten calendar days short of one year since the start of the “standstill period” and it seems the standstill period commenced at a time prior to all matters material to the contract award decision being resolved;

Over two years of Preferred Bidder negotiations;

The reported additional capital expenditure (circa £230m);

The reported additional £0.5bn cost to the taxpayer;

The reported additional 85 employees;

Market reports and rumours strongly indicating a significant transfer of risk back to GMWDA during the Preferred Bidder negotiations;

we believe there is a prima facie case to answer by GMWDA in respect to its compliance with its legal obligations under Procurement Regulations.

Without prejudice to any further claims we may have, we believe that it is absolutely necessary for us to carry out a full and detailed evaluation of our BaFo bid against the final PFI Contract in order to satisfy ourselves that we have not been treated unfairly and nor have we been discriminated against.

I also remind you of the Sita Consortium BaFo feedback attached to the Authority’s “Alcatel” notice of 26th January 2007 which stated:

The Sita bid was more expensive than the Viridor bid in economic and affordability terms before any adjustments were made under the Authority’s evaluation methodology; and

The tender price offered by Sita in economic terms scored lower than Viridor and this accounted for the largest element of the difference in terms of the scores or Funding and Commercial Issues.”

“We reserve our rights to refer this matter to the European Commission. We also [reserve] our rights to claim damages for loss of opportunity on future profits (circa £90m NPV) and wasted bid costs (circa £2.5m).”

“All the tenders received were compared and assessed objectively. From the detailed debrief we provided, you should be able to see that. You should also be very reassured that even after the award was made in April 2008, the relative scoring was monitored to ensure fairness was being maintained as matters evolved and progressed. As a result, the Authority entered into the contract with Viridor Laing (Greater Manchester) Limited because that contract best fulfilled the criteria we had set to judge most economically advantageous tender [sic] which in turn reflected the conditions necessary to meet the Authority’s needs and the needs of our citizens.

Your letter makes a number of assertions and, from these, seeks to extrapolate or infer a series of unfounded and untrue allegations, as a result of which you request a number of documents and explanation.

With respect, you are not entitled to make such requests.

When the Authority wrote to Sita on 18th April 2008 informing you of its decision to award the contract to Viridor Laing (Greater Manchester) Limited, it was envisaged – indeed, expected – that the contract would have been entered into shortly thereafter.

However, as became universally the case throughout the entire PFI market, certain financing issues then arose, euphemistically now referred to as the credit crisis. Given the unique set of economic circumstances which we have all been enduring over the last 12 months or so, and indeed are ongoing, it will come as no surprise to you that, in the event, these issues took longer to resolve than could have been anticipated. Clearly, though, they have now been, and indeed we believe we are the only major PFI scheme to have achieved this.”

“I am disappointed that in your letter of 18 May you felt unable to address the questions I properly raised and to provide the requested information. As you know, the PFI Contract has continued to be of interest to Sita, not least because of our continued appointment as Reserve Bidder. Accordingly, I have included in this letter detailed reasons (which largely re-iterate my previous letters to you and Tim Date) why we believe that GMWDA has breached its obligations to Sita under procurement law (together with detailed legal corroboration. Hopefully you will be in no doubt that GMWDA must provide the information Sita has requested.

It seems to us perverse that GMWDA should think it appropriate to inform us that the contract had at last been signed, draw our attention to a Press Release which showed that the contract had been let at sums substantially higher than our own bid, but failed to provide us with any further debrief information. According to your letter of 18th May 2009 such information is readily available to you (the “relative scoring was monitored” and the contract now entered into with Viridor Laing (Greater Manchester) Limited is “the most economically advantageous”), and the delay in disclosure of the Project documents unnecessary.

According to your own press release…[VL's] headline figure is 15% more expensive than Sita’s tendered bid (£3.8bn as against circa £3.3bn), the cost of capital works 55% more expensive (£640m as against £413m) and the head count 13% higher (736 as against 651). These very substantial increases raise obvious questions as to why the Sita bid was not reconsidered. I also note the statement in your letter dated 18th May 2009 that after the award was made in April 2008, “the relative scoring was monitored to ensure fairness was being maintained as matters evolved and progressed”. The phrase “evolved and progressed” and your later references to “financing issues then arose” are a strong inference of renegotiation of the contract terms following appointment of preferred bidder and the issue of the Alcatel letter which, as this letter sets out, is a clear breach by GMWDA of its duties (including fairness) to unsuccessful bidders. I believe that these matters require further explanation as we have previously requested. In particular, you have not offered to provide the analysis and conclusions from subsequent monitoring of relevant scores after April 2008. I would expect that funders (particularly if not involved at BaFO stage) would have wanted to re-assess the risk allocation and that any changes to the Project documents would encompass changes in price and risk allocation.

If Viridor/Laing were unable to confirm their funding arrangements and/or contract on the terms they had offered at BaFO stage, then their bid should have been rejected, and Sita should have been offered the contract on the terms they tendered. The failure of GMWDA so to act is a breach by GMWDA of the Public Services Contract Regulations 1993….and [the 2006 regulations].

If GMWDA found that in such circumstances Sita was also unable to fulfil the terms that it had tendered, then a further round of negotiations would have been required in order to establish which of the parties could, in the new economic situation, put the most economically advantageous tender. The failure of GMWDA so to act, or set out its intention to so act, if Sita could not supply the contract on the terms it tendered, is a further or alternative breach of the Regulations referred to above.

….

It is irrelevant whether, if it is the case, GMWDA is of the view that, in the changed economic circumstances Sita could not now provide a tender that offered better value for money than Viridor/Laing. GMWDA cannot possibly know that. That is a question that must be expressly explored with us, particularly as Reserve Bidder, and one which we remain willing to consider on a competitive basis, as will have been clear from our continuing interest in the contract.

In any event, Sita’s bid was clearly more robust than Viridor/Laing’s in respect of any worsening economic conditions. According to GMWDA’s letter of 26th January 2007 “the Sita bid scored higher with respect to the credibility of the financial assumptions used and high interest cover ratios. However this higher score was offset in part by the more expensive cost of debt”. Thus GMWDA [sic] themselves had already established grounds for assuming that Sita would be likely to improve their bid relative to Viridor/Laing in the light of the change in economic circumstances.

If there has been a readjustment of the risk between GMWDA and the Contractor, then that is a further breach of the regulations, amounting to a material change in the specifications. Further facts would emerge when the Project documents are published. Such publication ought to clarify matters in favour of the Viridor/Laing bid, according to the reassurances you have sought to give, and accordingly we can see no reason for any further delay. However, we will also need to know what changes were made since the appointment of Viridor/Laing as preferred bidder and what was negotiated before.

Finally, by way of introduction, we object to your characterisation of your earlier letter as based on ‘rumours, untruths and spin’. Our letter was based principally on the facts set out in your own Press Release when compared with our own tender. Insofar as allocation of risk is concerned, this is a matter on which you will be obliged to provide information through publication of the Project documents in any event.”

“The delay was caused principally through Viridor’s further development of the Combined Sheet and Power facility offer, at the request of GMWDA.”

Then it says:

“In the present case, the PFI contract that has been entered into is clearly not the contract in respect of which Sita was debriefed in January 2007. We were aware of certain changes relating to the construction works to be provided by Laing which prompted our letter of 16th April 2008. This letter is not concerned with those changes, but the changes we now learn of through the press release of 8th April 2009 which we believe required the authority to carry out a further debrief. Accordingly, by way of a further breach, GMWDA has unlawfully entered into a ‘new’ contract with [VL] without providing Sita with the necessary debrief and opportunity for challenge under the 2006 Regulations (Regulation 32).

Whichever regulations apply, Sita may in any event apply to the court to have the award and contract set aside on the Alcatel principles.

(iii) The materiality of the changes.

It is well established that under all the procedures, whether open, restricted or negotiated, no post-tender negotiations are permitted. No tender is entitled to increase its price after the conclusion of the award process, and no changes to the specifications are permitted, otherwise the process is clearly and demonstrably unfair to those tenderers not offered the same opportunity.

In respect of the negotiated procedure, the OGC has made clear that negotiations are permitted until the final assessment of bids only…

(iv) The further assessment process

According to the GMWDA letter of 18th April 2008, the scores of Viridor/Laing and Sita had remained unchanged, when compared in their BaFO submissions. On that basis the financial scores were 28:30 in VL’s favour. However, consistent with the application of the criterion of the “most economically advantageous tender”, GMWDA was required to consider all the options according to their total scores. The order was Viridor/Laing MSB1, Viridor/Laing MSB3, Sita VB1. Thus if Viridor/Laing was unable to supply either MSB1 or MSB3 at the costs tendered, GMWDA was obliged to consider Sita’s next tender, VB1.

(v) Promptness

Sita is keenly aware of the requirement to bring proceedings promptly. It sought information on 18th April 2008, following which it was assured on 9th May 2008 that a reassessment of [VL's] bid had not changed the ranking, and that the Project Agreement, giving further information, would be published in due course. On the basis of the facts then supplied, Sita had suffered no ‘loss’ nor ‘risk of loss’.

On 16th April 2009 GMWDA drew Sita’s attention to a Press Release, giving information concerning the signing of the agreement with [VL], together with the pricing information set out above. Sita subsequently sought a further Alcatel letter and further information was refused.

GMWDA has again offered further, though less clear, assurances that a proper assessment still favours [VL]. In the light of the facts supplied in GMWDA’s Press Release, Sita is no longer able to rely on those assurances. Those facts provide clear evidence of material breaches of the Regulations. Sita is entitled to such information as will enable it to know whether the contract has been lawfully awarded and entered into: Rapiscan v HMRC…

In the circumstances, if GMWDA continues to refuse further information, Sita will have no choice but to bring proceedings on the basis of the information so far available; to seek from the court an order that further information be supplied, to apply for an order that the contract be set aside, alternatively that no further steps be taken to implement the contract pending further resolutions of the matters.

In the circumstances, we invite GMWDA to provide the necessary further information as a matter of urgency in order to comply with the appropriate pre-action protocol, and to avoid an application to the court, should that prove necessary. As already noted, the necessary information is, according to your letter of 18th May 2009, readily available, as is the Project Agreement.

We would normally have invited GMWDA to extend the time for bringing proceedings, but given that the application will include an application to set aside the contract (which we would expect in the circumstances, to have been entered into on a conditional basis) further delay would seem inappropriate.”

“(a) Failure to provide sufficient debrief information to enable Sita to know why it remains unsuccessful and/or the characteristics and relative advantages of the contract finally awarded and entered into with [VL]….

(b) Wrongly entering into a contract with [VL] in breach of [regulations].

(c) Wrongly allowing [VL] to improve the terms of its offer, after the conclusion of the BaFO stage and award; failing to reject Viridor/Laing’s bid when it was unable to offer the terms of their BaFO and wrongly failing to then offer the contract to Sita. Further, so far as may be relevant, (if Sita could no longer fulfil the terms of its offer), failing to reopen negotiations with both parties….

(d) Wrongly, if it is the case, changing the specifications with regard to the allocation of risk as between Viridor/Laing and GMWDA…

(e) Acting without regard to, and in breach of, the over-riding obligations of fairness and equal treatment in all these matters.

In the circumstances, please confirm that you will provide the information we properly requested in our letter of 21 April 2009. Due to the shortness of time, we would be happy to receive the information through a detailed de-briefing, and we note that you have already carried out relative scorings since April 2008. However, as Sita does not want to prejudice the undoubted grounds it has for legal challenge, then we must insist that such confirmation is provided within the next five working days….with the debrief to be held no later than the end of next week….Sita can then reconsider whether to issue proceedings in respect of some or all of the above breaches.”

It is GMWDA’s case that this letter demonstrates that Sita knew all that it needed to know in order to understand (if it were the case) that there had been an infringement of the regulations as now relied on. It sets out clearly what it knew and its sources, and none of its sources of information were later than the announcement of the final contract. Sita was busy drawing conclusions and was able to make categorical and firm allegations of breach. It even threatened proceedings. Furthermore, it was also alive to the possibility of time bars.

“The proposals in relation to the Runcorn site were in the public domain due to the planning requirements at least from the summer of 2007, and were mentioned in GMWDA’s correspondence to you on 9 May 2008. Further, whilst these developed proposals and the subsequent planning permission obtained for the Ineos Chlor facility qualitatively improved the VL bid, there was no rescoring of the VL BaFO upwards….

Accordingly, there was and has been no change to the technical specifications as set out at the BaFO stage when both Sita and VL were last in competition with one another. The modifications detailed above did not alter the scope and characteristics of the PPP beyond what was contemplated in the contract notice, and nor were they so substantial, individually or collectively, as to be likely to have attracted prospective tenderers who did not consider tendering following publication of the original contract notices….

In order to confirm that the post-preferred bidder discussions did not undermine the original decision as to which tendered offered the best bid, in July 2007 GMWDA carried out a reassessment of the relative positions of the VL bid as further developed in relation to the Ineos Chlor facility and Sita’s BaFO bid, which obviously concerned a different geographical location. From this reassessment, GMWDA felt confident about proceeding to award the contract to VL. Once again, such a step was in line with best practice….”

Mr Bowsher points out, correctly, that this letter does not refer to the December 2007 exercise and what was said about scoring there. This letter does not otherwise add to the knowledge that Sita already had (such as it was) of any infringements or grounds for bringing proceedings, as Mr Bowsher conceded. It ended by referring to time limits:

“GMWDA very much hopes that this letter will sufficiently address the outstanding procurement concerns which Sita had in relation to this procurement exercise. However, we must stress that if you do initiate legal proceedings against us, we will seek to strike out the proceedings (whether for an interim application, final order or both) on the basis that Sita has no genuinely good arguable case and also the claim is, in any event, out of time.”

“Due to the inconsistencies and lack of clarity in the information you have provided and refusal to provide information we requested in our letter of 18th April 2008, 22nd December 2008, 21st April 2009 and 27th May 2009, we have asked Michael Bowsher QC…. to review the correspondence between GMWDA and Sita and what follows in this letter is his analysis of the law you have propounded and Sita’s position in this regard.

The relevance of Alcatel and whether the 1993 or 2006 regulations apply

…

The fact that Sita did not pursue any challenge a year ago does not establish that there were no grounds for complaint then. In any event, the matters we are concerned about post-date those events and the question is therefore whether those more recent events give rise to a claim. Such a claim could not have been made a year ago, and the fact that there was a purported compliance with the Alcatel-type requirements then cannot protect GMWDA from negotiations subsequent to the Alcatel letter provide the grounds for a challenge….

Whether the changes would have affected Sita and VL equally.

Since we are not yet clear what changes have been made to VL’s bid, save that the price has changed substantially (at least a 15% increase overall, including a 55% increase in capital costs being the best information we have), we are unable to comment in detail on whether the Sita bid would have been affected equally by the relevant changes, but the evidence so far is clear enough, and our further enquiries can hardly be described as ‘fishing’. As to ‘fishing’, tenderers are entitled to such information as will enable them to pursue their rights, and a request for a proper debrief can never be regarded as mere ‘fishing’, even without any evidence of breach.

….

On the subject of finance, which we infer (on present information) is a major issue, it should be noted that Sita’s offer comprised senior debt which was 100% underwritten by both RBS and HSBC and there is no reason to believe that Sita could not have achieved financing on better or equivalent terms to VL. Indeed, we would have expected to have obtained alternative finance, if necessary, without increasing its cost, or without increasing it as much as VL, noting that our financial position was more robust than VL’s. But the point is that we should have had the opportunity of maintaining our offer, or of making an alternative offer to be compared with that of VL, given the substantial, as opposed to immaterial, changes that appear to have resulted.

….

Conclusion

We reiterate that GMWDA is in breach of its obligations under the applicable procurement regulations….and in particular the underlying obligations of equal treatment and transparency, in proposing to contract with VL on a basis which has changed materially, which was the subject of the procurement procedure and the award made in April 2007. This letter is to be treated as further formal written notice of Sita’s intention to bring proceedings under both of these sets of regulations in respect of those breaches.

However, it would be more efficient, cost effective and more sensible for any legal proceedings to go forward only on a focused basis. Accordingly, we continue to seek full information on the nature and extent of the changes you have introduced into the contract with VL since we were debriefed so that we can be sure that these proceedings are properly focused.

[Further information is then sought]

We should then be able to verify whether the increase in VL’s price was due to financing issues arising from the collapse in the financial market (and which any bidder would have faced) or other matters for which Sita may have been able to be more competitive.

In the absence of prompt disclosure of such information, we will either seek an order from the court for such information or, alternatively, issue proceedings and seek it through the process of disclosure. It seems likely to us that the appropriate course will be to commence proceedings on the basis of our letter of 27th May 2008, as further considered above, including for failures to provide adequate information to satisfy obligations of transparency and equal treatment. However, once the claim form is issued and served, we will immediately seek directions for early disclosure of specific documents (probably those identified above), and for deferral of the service of any Particulars of Claim until appropriate disclosure has taken place and we are able to take such disclosure into account.

….

Please respond to me within the next ten days in order to confirm we can have access to the information we have requested and the process for providing the information.”

“If the requested information is not forthcoming then, in order to minimise any further delay in obtaining the information Sita is entitled to in order to assess its remedies for breach of procurement law, we have instructed Michael Bowsher QC and Jennifer Skilbeck of Monckton Chambers to issue and serve proceedings next Tuesday (30 June). The purpose of issuing proceedings will be in the first place, to request the court to order the authority to supply the required information and, secondly, to obtain damages, should the information reveal a breach of the regulations, as seems to be the case. I hope that this does not prove necessary and I await your reply on Friday.

It should be emphasised that Sita is not seeking to obtain information concerning the VL tender for any other purpose than to establish the changes to it since award and debrief are material and unlawful. That information should be capable of supply without there being any question of the disclosure of commercially sensitive information. If we do not receive this information we shall, of course, proceed initially on the basis that the information disclosed in the Press Release provides prima facie evidence of a very material and unlawful increase in price, post-award. Further, that it was negotiated in circumstances in which Sita offered to re-enter the process itself when it became clear that a contract had not been concluded with VL and that that offer was refused.”

“We expect you not to issue proceedings before you have seen and considered our response, which ought to reassure you that there has been no breach of the relevant procurement regulations.”

Sita responded that on the following day (26 June):

“I agree that it would be preferable not to issue proceedings until we have seen the information you are currently preparing. However, we will need to issue proceedings as a protective measure unless you are able to give us an assurance that you will not raise any limitation point against us on account of that delay.

Please confirm by the end of Monday (30 June) that you undertake not to raise a limitation point in respect of any delay in issuing proceedings until further notice, such notice to include five working days.

Upon receipt of such undertaking we will defer issuing proceedings.”

That was met by an email from GMWDA on 29 June:

“For the avoidance of doubt, however, we will not take any limitation point in respect of any extra time it takes us to respond beyond 26 June 2009, provided any proceedings which you elect to bring are issued no later than five days after our substantive response to your letter – which we anticipate being with you shortly.”

“I note that you have not supplied any information relating to VL’s BaFO bid as requested in our letter of 24 June, nor have you explained the changes in VL’s Bid between January 2000 and April 2008. Your latest letter indicates (for the first time) that there were significant and material changes in the VL’s Bid (including price) between January 2007 and April 2008 which meant that even before April 2008 VL might not have been competitive with Sita’s final BaFO bid submitted 5 January 2007 including…. [various matters]

Your letter seems to ignore the movement pre-April 2008 and implies that Sita’s position is that we are happy with everything that happened pre-April 2008. This is not the case….

From the information supplied in your letter of 3 July there seems to be little doubt that there were material contractual amendments between appointment of preferred bidder and the “Alcatel” letter which were not explained (and GMWDA declined to explain in its letter of 9 May 2008 and subsequently) which indicate that Sita could have been successful if it had been allowed to bid under those contractual terms. On the information before us there is no doubt in our minds that GMWDA is in breach of its obligations under the applicable procurement regulations…

Accordingly we believe that if GMWDA do not disclose full details of VL’s BaFO bid as requested in our letter of 24 June and details of when and in what context VL’s Unitary Charge had increased to £3,439bn by March 2008 then Sita will, in the absence of prompt disclosure of such information, either seek an order from the court for such information or, alternatively, issue proceedings and seek it through the process of disclosure.

Unless you confirm by noon on Wednesday (8 July) that GMWDA (a) will provide this information and (b) will extend its undertaking that for the period that this information is outstanding and a further five workings days for Sita to consider this information, you will not raise any limitation point against us on account of that delay, then we will defer such court proceedings. Otherwise we will commence court proceedings after Wednesday in order to obtain the information we seek.”

Thus this letter shifts the focus, or perhaps broadens it, to the earlier period, claiming increases in price in that period were relevant for the purposes of a claim for infringement of the regulations. Whether that is significant is something I deal with below.

“We will by 17 July 2009 provide you with a detailed explanation of the circumstances in which VL’s Unitary Charge increased between its appointment as on 26 January 2007 and the Alcatel letter.

For the avoidance of doubt, we will not take any limitation point in respect of the time it takes us to provide this information, and VL’s final BaFO as requested in your 24 June 2009 letter, provided any proceedings which you elect to bring are issued no later than five days after our provision of this information.”

The significance of this last paragraph is that it offers a further extension of the limitation period. VL’s final BaFO was never provided. Mr Bowsher took the point of the hearing before me that that meant that the limitation period remained open and that his proceedings were brought in time.

“Whilst previous letters highlight and point to numerous potential breaches of procurement law, your new information strongly supports our concern that GMWDA does indeed have a prima face case to answer for serious deficiencies in the way it conducted the PFI Contract’s procurement. There is much in your letter which we are concerned about, but it would be more constructive for us to reserve our position generally on the letter and to confine our points made below to our key concerns.”

Those concerns are then set out and towards the end of the letter it set out some more information it required under “Next Steps”. It went on:

“So you can be in no doubt, if GMWDA are not prepared to agree to our reasonable requests, then we will have no option but to issue proceedings to require same. Please confirm by the end of Monday 27 July that this information will be provided. Please also confirm that GMWDA will extend the date for which it will not take any limitation point for a further five working days following receipt of this information.”

“We see no basis at present to justify any further extensions of time. It is clearly in the interests of all parties to have certainty and finality in respect of this procurement and to avoid incurring any further unnecessary costs.”

There was no response to this letter until a letter from Messrs Osborne Clarke, solicitors for Sita, dated 26 August 2009 which set out a summary of Sita’s complaints. The letter stated that they anticipated issuing and serving proceedings during the course of that week without further notice. The claim form was in fact issued on the next day (27 August) and particulars of claim followed on 11 September.

“The Defendant, a ‘contracting authority’ for the purposes of the Public Services Contract Regulations 1993 and the Public Contract Regulations 2006, sought tenders for the provision of a PFI waste contract by an advertisement placed in the Official Journal of the EU on 2 February 2005. The Claimant tendered and wished to be awarded the contract. In breach of its duty to the Claimant under either or both sets of Regulations, the Defendant failed in its obligation to assess the tender so as to identify the ‘most economically advantageous tender’ in the manner required by Regulation 21(1)(a)(1993 Regulations) and/or Regulation 30(1)(a)(2006 Regulations) and/or acted in breach of the EU law obligations of fairness, equal treatment and transparency in its conduct of the tender process. In further breach of the Regulations and/or the same obligations of transparency, the Defendant failed to inform the Claimant of the characteristics and relative advantages of the successful bid. Alternatively, by virtue of the same facts and matters, the Defendant is in breach of a contract between the Claimant and the Defendant, which is to be implied from their relationship in this process. The Claimant seeks damages for the Defendant’s failure to award the contract to the Claimant and/or for the Claimant’s loss of the chance of being awarded the contract and/or the Claimant’s waste of tender costs.”

iii) Providing misleading information as set out in paragraphs 64 to 66.

So far as the failure to provide proper information is concerned, the following material is relied on: i) The debrief information in May 2008 relied on assessments in January and June 2007. In fact that material was out of date because there had been further assessments in July 2007 and December 2007, and a further re-evaluation in April 2008. This is pleaded in paragraph 64 (an original, not an amended, pleading).ii) The de-briefing was partially postponed in May 2008 by virtue of the indication that the VL contract would be published; and that element was never completed because when provided (in 2009) it was heavily redacted. This is pleaded by amendment in paragraphs 64A and 64B.

iii) GMWDA continued to rely on the de-brief information of in subsequent correspondence up to July 2009. See paragraph 65 (an original paragraph).

iv) A failure to provide a further Alcatel letter in April 2009, in the face of a request that one be provided.

iii) Some information is given in sub-paragraph (v), the effect of which is not clear. What is clear to me, however, is that in its last sentence that sub-paragraph misrepresents the report in question. The substance of the pleading is that EY had stated that they had insufficient evidence to draw conclusions as to MEAT. The actual paragraph, which is in evidence, is one in which EY point out to the Authority that further financial modelling is expected, and only then would the Authority be able to form a final view that the VL bid remained the most economically advantageous tender. The actual wording has a very different thrust from that suggested in the pleading.

“43. Only once the unsuccessful tenderer or candidate has been informed of the essential reasons of his being unsuccessful in the award procedure may it generally be presumed that he knew or in any case ought to have known of the alleged breach of procurement law. Only from then on is it possible for him sensibly to prepare a possible application for review and to estimate its chances of success. Before receiving such reasons, on the other hand, the person concerned cannot as a rule effective exercise his right to a review.”

Miss Rose emphasised the word “essential” and said that that determined the level of information required. The information required is the essential reasons indicating a prima facie case. One did not necessarily need detail for this purpose, and in this case the detail provided in the 4th July letter was not necessary. Mr Bowsher did not address particular submissions to this point, but maintained that on the facts his client did not know enough to be able to plead a case before July. He relied on Letang v Cooper[1965] 1 QB 232, Nomura International plc v Granada Group Ltd [2008] Bus LR 1 and Clarke v Marlborough Fine Act (London) Ltd [2002] 1 WLR 1731 as justifying his client in waiting, if not requiring it to wait, until it had enough facts, or knew enough, to justify commencing an action. He said that until July his clients would have been able to identify facts consistent with a breach, but not facts which demonstrated breach. It is implicit in his submissions that his client required detail as to how the breaches arose before the clock started running.

iii) It refers to “strong evidence” of a re-negotiation, which is a “clear breach” by GMWDA of its duties.

iv) It asserts that the failure to offer Sita the contract was a “breach” by GMWDA of the Regulation.

v) There are other plain claims of breach in the passages set out above.

vi) Sita felt able to draw inferences from the facts in the press release.

vii) It was aware that the contract entered into was not the contract in respect of which Sita was de-briefed in April 2008, though it expressed itself not be concerned with that.

viii) It was aware that it had not had a further de-brief in April 2009, and asserted a right to complain about that.

ix) The facts provided “clear evidence of material breaches”.

x) It actually threatened proceedings. That cannot properly be done unless the threatener believes he has a basis for that (or, in the terms of the Regulation, grounds).

xi) It demonstrates an awareness of time running. That is only a relevant thing to be aware of if there is also an awareness of the significance of that (limitation). It therefore amounts to an implicit acknowledgment that Sita is aware of grounds for bringing proceedings.

iii) It threatens proceedings, to be commenced “on the basis of our letter of 27 May 2008″. This further propounds that letter as a letter before action, and demonstrates knowledge as at 27th May of the existence of a claim. The claim is said to be one based on lack of transparency and failure to afford equal treatment. That, broadly, is the nature of the claims ultimately made in the current proceedings.

iii) A failure to deal fairly with Sita and in accordance with the duties to Sita as prescribed in the Regulations because the procedures intended to procure the most economically advantageous tender required, on the facts, that Sita be allowed to re-submit a bid.

“That is no doubt for the good policy reason that it is in the public interest that challenges to the tender process of a public service contract should be made promptly so as to cause as little disruption and delay as possible. It is not merely because the interests of all those who have participated in the tender process have to be taken into account. It is also because there is a wider public interest in ensuring that tenders which public authorities have invited for a public project should be processed as quickly as possible.”

Obviously the context of those remarks is different from the context of the present case, but it (and the actual decision on that case) does betoken a strict approach to the exercise of discretion. Similar remarks, albeit again in different context, were made by Buxton LJ in Matra Communications SAS v Home Office [19992] 1 WLR 1646 at pp 1657B and 1663D. Those cases support the proposition, which I find to be accurate, that a strict approach should be taken with an eye firmly on the policy reasons for prompt challenges.

The public interest in scrutiny of GMWDA’s conduct.Ms Wolfenden correctly points out the public interest in the integrity of public procurement procedures. It is one of the drivers underlying giving the disappointed tenderer a remedy in the first place. She also points out that this is a big contract, and that the claim is potentially big and serious. All those factors are true. They are, however, of little weight in favour of exercising the discretion. They are the reasons why the remedy is there in the first place. That remedy is subject to time bars. So the time bars in principle override even if a claim is prima facie good and big. The latter factors are not a particularly good reason for overriding the time bar. The nature and size of a claim is not always irrelevant to the discretion. One can imagine circumstances in which the weakness or small size of a claim tells against the exercise of a discretion, but as factors in favour of it the size of a claim and its merits are weak.

GMWDA’s lack of openness and conduct generally between January 2007 and 2009This is a reference to the fact that GMWDA did not make the full necessary disclosure of what had happened after VL acquired its preferred bidder status, and to the fact that what was disclosed is said to have elements of the misleading about it. GMWDA’s communications were said to have been “carefully crafted” to supply very limited information. It is said that had it acted with appropriate transparency the claim would have been brought much earlier. GMWDA, which had the benefit of lawyers throughout, took the risk of a substantial damages action in making the limited and careful disclosure that it did.

Absence of prejudice to GMWDA arising from the delayAt one level this is correct as a matter of fact. GMWDA has not identified any degree of prejudice which will be suffered by it if this claim is allowed to proceed which it would not have suffered had proceedings been commenced in July. The absence of prejudice would be a potentially relevant factor if there were other factors which supported the exercise of the discretion, at least in the sense that the existence of prejudice would point the other way. But as a separate factor it is of little weight. A short time period for the commencement of proceedings has been imposed in the interests of good public administration and so that public procurement authorities can know as soon as possible whether or not one of its exercises is being challenged. The existence of such a claim, let alone its being established, is capable of causing significant disruption to the public finances and the deliberations of those who have to plan budgets and recovery. The short time bar period is intended to limit the effect of that. Time bars are potentially draconian in their effect in that they are mechanical and absolute, and are not based on ad hoc prejudice considerations. The fact that no additional prejudice is sustained a week, two weeks, or a month after the lapse of the period is not, of itself, a good ground for extending the period. As a matter of fact it is likely to be the case in a large number of situations but is beside the point.

Sita issued promptly after the letters of 3rd, 17th and 27th JulySince those letters were irrelevant to the knowledge of the cause of action which had accrued, it is irrelevant that the proceedings were issued promptly after them. In any event, I do not consider that they were. The letter of 3rd July is the watershed letter, according to Sita. It is that letter which told it what it wanted to know. Even if it were the case that it could be said that somehow Sita was justified in not issuing until that time, issuing on 27th August does not amount to promptness, in the circumstances. It is a month and a half afterwards, and anything but prompt in the circumstances. The two later letters were further requests for further information. If a litigant could claim discretionary extensions for as long as he was pursuing requests for information which might be thought to be justifiable or sensible in themselves, there would no end to it. They are in my view irrelevant to this point on any footing.